Correlation Between Salesforce and CHINA CONCH

Can any of the company-specific risk be diversified away by investing in both Salesforce and CHINA CONCH at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Salesforce and CHINA CONCH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and CHINA CH VENT, you can compare the effects of market volatilities on Salesforce and CHINA CONCH and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Salesforce with a short position of CHINA CONCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and CHINA CONCH.

Diversification Opportunities for Salesforce and CHINA CONCH

-0.26

Correlation Coefficient

Salesforce  CHINA CONCH

Very good diversification

The 3 months correlation between Salesforce and CHINA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and CHINA CH VENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA CH VENT and Salesforce is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Salesforce are associated (or correlated) with CHINA CONCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA CH VENT has no effect on the direction of Salesforce i.e., Salesforce and CHINA CONCH go up and down completely randomly.

Pair Corralation between Salesforce and CHINA CONCH

Considering the 90-day investment horizon Salesforce is expected to under-perform the CHINA CONCH. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 2.47 times less risky than CHINA CONCH. The stock trades about -0.18 of its potential returns per unit of risk. The CHINA CH VENT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  83.00  in CHINA CH VENT on December 20, 2024 and sell it today you would earn a total of  7.00  from holding CHINA CH VENT or generate 8.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  CHINA CH VENT

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CHINA CH VENT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA CH VENT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CHINA CONCH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and CHINA CONCH

The main advantage of trading using opposite Salesforce and CHINA CONCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, CHINA CONCH can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHINA CONCH will offset losses from the drop in CHINA CONCH's long position.

The idea behind Salesforce and CHINA CH VENT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.